How to Diversify a Business

Blog: Latest News

Developing the right marketing strategies for a new business is always a challenge. The important thing is to choose your global marketing strategy before deciding on the smaller things like where you are going to advertise and what your message will be. A good way to start is to decide how you wish your enterprise to be seen by the world. Every marketing decision you will make can change how your customers and your partners see you, so it is better to know where you want to be before starting any action.

One of the most known theory in marketing is the marketing mix, which can also be called the “4 Ps” of marketing. It gives you four distinct items that any business needs to think about when defining its marketing strategy.
1- Product

Are you aiming for a high quality product, a standard product, a technologically-advanced product or a targeted product? In order to determine how you want your product to be properly, you need to assess which market you want to target. Are you looking for a broad market or more for a niche which will touch only some people? Once you have answered those questions, you can define which type of product is the best fit for the market you are aiming for. For example Dead Sea Cosmetics Business – it is a very lucrative business that makes from 10000 dollars a day per kiosk. The money flowing through Dead Sea beauty kiosks is staggering, you can read more about it here.
2- Place

The place is about where your products are going to be sold or where your services will be rendered. Are you going to use the Internet to sell worldwide (and have to deal with customs) or will you distribute your product in some specific stores only? The type of product you have chosen as well as its target clientele are keys factors in determining where your product should be found. A high quality product should be sold only in renowned stores, for example, since selling it elsewhere can affect customer’s perception of its quality, as well as the image of your enterprise.

3- Price

There are a lot of pricing strategies. Choosing the right one for your product should be based on the decisions made earlier about your product and place. For mass market penetration, a good strategy is to start off your product at a lower price than your competitors to encourage people to try it. Then, you raise your price in the hopes that your clientele will be loyal to your product since they perceived its advantage. For a technologically-advanced product, you might want to use the skimming strategy which consists in selling at a high price to the early adopters in order to recuperate your production costs as quickly as possible.

4- Promotion

Promotion decisions will be about how the ensure your targeted customers hear about your product. It goes from advertising to sales promotion. I recommend finding out the best way to reach your clientele and to focus your efforts and money on them.

Once you have established your marketing mix and have made sure every part of it is coherent with each other, you will have a pretty good idea of what are the best marketing strategies for you new business. Making sure you are grounded with your market segment should be your priority.

Everyone knows that networking is important when you are looking to find a job. However, you should also know that it is a crucial aspect to having a successful business as well. In fact, in most start-ups, it can make the difference between establishing a long-term business and failure in the first few years.

When you are starting a business, an important part of your network should allow you to get the information you need in a timely manner. People can give you advice on business in general, as well as on the market and the customers you are aiming for. Learning about important events in your industry is essential if you want to respond to them properly. Networking will increase your chances of knowing which competitor is developing a new technology in time for you to react.

Networking is also a great way to get customers, especially when you are selling to a limited number of customers. If you read an add saying that product X is wonderful, you might consider trying it. If your business partner, who knows product X’s manufacturer, tells you the product is great, you will be more tempted to try it. That simple example shows how much human interaction is important in our society. Networking is all about human interaction, so it can always play in your favour.

Getting to know as many people as possible will make it easier for your enterprise to get financing, to be subject to an article, to find the best suppliers, to entertain good relationships with clients and to build a great business image. In some way, networking is free publicity, as being known by people will make it more likely for them to talk positively about your enterprise.

Never neglect the importance of networking in business. You can start today by contacting business organization, attending training events as well as events specific to your industry like a convention or seminar. All it takes is some personal skills, basics discussion topics and a smile and you can start improving your business through networking today!

If you are starting your enterprise, a business plan is a mandatory tool in order to get financing and to give credibility to your project. If you already have your enterprise, having an updated business plan will help you know where you are going and how, which is something that can be easily forgotten or put aside with the commotion that happens when you manage a business.

To build your business plan, the first thing you need to figure out is where you want to go and what you want to achieve with your business. Once you have figured that out – and it might seem like a simple step when you are reading this, but it requires a lot of thinking – the next step is to set up a series of goals that you need to attain in order to get where you want to. The business plan is then basically your plan to achieve those goals.

A complete business plan will depict clearly what products or services you want to sell in various timeframes as well as the targeted markets for this products or services. It requires research on the markets and explanations on how you will attract your customers based on the statistics or other data you have found. You should include in it a SWOT analysis, which is a standard way of looking at yourself as a company (strengths and weaknesses) as well as your industry (opportunities and threats). The strategy you will decide on to reach your goals should be coherent with this analysis.

Typically, a business plan will mention short-term, mid-term and long-term goals and how you plan to achieve them. However, if you make a business plan for yourself, you can adapt the time frames to your purposes. While building your business plan, you should also think about the different fields of an enterprise: marketing, operations management, supply chain management, human resources and finance. Something should be plan in all the important departments that apply to your business.

Making a business plan will always require numbers. Build a budgeted income statement and cash flow statement. It will help you figure out what you need to do in order to keep your business going and will give you a basis to evaluate your results on. If you are looking for financing, your debtors or investors will want to know if they can reasonably recuperate their investment and make a profit (through interests or dividends) from it.

Making your business plan is quite a bit of work and it should not be taken lightly. This task will contribute to make you start focused on the right areas as well as convince outsiders to help you with it. It is the first step you take towards your success!

When you feel your business may be in a rut, you know it’s time to open some new doors and diversify. The following is a list of the top tips and valuable pieces of advice for diversifying your business.

1. Be Open to New Ideas

Even if you want to change, it can be hard to open your eyes and ears to new ideas. This is especially true if your treat your business like your child. You built it from the ground up and watched it grow. You don’t want it messed with. But when new ideas are needed, make sure to keep an open mind. Ask people from other businesses, even if their business models, products or services are completely different. Also get new ideas online from the world’s leading businesses.

2. Do Your Research

Before you take the big step in changing your business, do your research. This a vital step and one that many business owners miss, much to their own detriment. Gather statistics and opinions from professionals in the world’s leading businesses as well as your own clients. You won’t regret it, and if done well, it shouldn’t take up much of your valuable time.

3. Prepare the Staff for Changes Ahead

Change can be difficult not only for you but for your staff as well. This definitely does not mean throwing your staff under the bus all at once. Offer changes slowly and in smaller steps that they can digest. Give warnings about a bumpy road ahead, but make sure they know that you’re all on the same team, and you all ways the same thing: success for your business.

Every business has its inherent risks. Has the manager of your business, you have probably assessed those risks and decided if you can live with them or not. If you decide you do not want to live with the currency risk, you can cover it by buying financial instruments. If your business is based on only one product or to products addressed to only one market, you might want to broaden your activities. This is when you choose diversification.

Diversifying your business can help you rely on more income sources, which gives you more stability because even if one of these sources goes down, the others might stay still or even increase, helping you keeping a steadier income. It can also give you more stability within a one year period if one of your products is seasonal and the other either is not or brings most of its revenue at a different season. Diversification is a strategy that can also be used to face competitors; either by invading their market or simply to offer the same variety of services they do. If the new product is successful, it will also help your enterprise get a higher growth rate.

What is diversifying?According to business theory, you are using a diversification strategy when you try to increase your sales volume with a new product destined to a new market. It is a pretty risky strategy, since starting a new product in a new market implies risks related both to the new product and the new market. However, it is the more efficient way to truly reduce your business risks for the same reasons. If one of your product fails for some reason, having a totally different product will allow you to continue your business. If the market you are selling to is badly hit by the recession, there is a chance that the other market you target will get through it more easily.

However, in everyday business talk, the word “diversify” is often used to qualify either a new product or a new market. For example, if you are selling industrial glue, you might decide to start selling domestic glue as well. By doing so, you have changed your market without starting a totally new product. Since your enterprise already has the expertise to manufacture the product, your main risk is to make an error while assessing your new market. If you decide to build a new product that will attract the same market, for example, a phone intended for the same consumers than those buying your computers, your main risk is solely towards your product: making sure it functions properly, that is has the high-quality your computers do and so on.

Another approach that is commonly called diversifying is vertical integration: doing different tasks for your supply chain. If you were producing clothes, for example and selling them to retail stores, you can decide to start your own retail store. This keeps you relying on the same product and market, so it does not reduce the risk the same way traditional diversification does. However, it can get you a better control of your supplies or sales, which can reduce another kind of risk you might be facing.

How to diversify a business?Any change and any growth is a challenge when managing a business. However, diversifying can help you be more successful, so sometimes the challenge is worth it. When you look at the various industries, it is mostly only huge enterprises that choose to diversify their business in the technical sense of the term and succeed. It requires a deep analysis of both the new market you plan to sell to and the new product you are conceiving. A huge amount of money needs to be put at once into this development and analysis or to buy a company that has already done this part for you.

A great way to achieve diversification for a medium-sized or small-sized enterprise is what I would call the step-by-step approach. If your goal is to have a new product and target a new market, establish smaller steps in order to get there. Maybe you can start by trying to sell a slightly modified version of your current product to a new market, see its reaction, adapt to it and make sure you understand its components first. Once you feel more confident in the market, then you can manufacture a new product.
The most important thing when you decide to use a diversification strategy for your business is to be prepared. Plan and study carefully your estimated costs, your customers, the marketing it will require and everything you would do if you were starting a new business.

Every business ordinarily starts with one single product destined to a single market. It is generally recommended to focus on this activity until it reaches success before deciding to diversify. Once you do decide to diversify, the key is to plan everything and, in most cases, take little (but challenging!) steps at the time until you get where you want to be.